Donna Szatkowski-Zych: Hi! My name is Donna Szatkowski-Zych. I'm an Audit & Assurance partner at Deloitte, and I also lead our sustainability, climate, and equity efforts in the Insurance industry. In September, we released our 2023 insurance industry outlook. The report covered a number of major trends and topics, including talent, tech and data finance, M&A (mergers and acquisitions), and more.
Given the amount of uncertainty [that] insurance executives are feeling, as they consider 2023, the goal with this year’s report is to be a resource for annual strategic planning and help those executives navigate the challenges and opportunities ahead.
Today. I’m having a conversation on one of these major insurance outlook topics—sustainability, which I think can be viewed as both an opportunity as well as a challenge. I’m speaking with an industry leader on the topic—Jon Richter, chief sustainability officer with MetLife.
Jon Richter: It’s a pleasure to be here. I’ve been with MetLife for about ten years, and as chief sustainability officer, my focus is on ensuring that sustainability and ESG (environmental, social, and corporate governance) issues are both understood across the organization and really integrated into how we operate and conduct our business.
Donna Szatkowski-Zych: Our 2023 insurance outlook makes the case that it’s time to move from ESG being a compliance concern to being a strategic, competitive differentiator for leaders in the insurance industry. Is this MetLife’s perspective? What would you say prompted this organizational focus?
Jon Richter: Sustainability and ESG certainly have compliance components, but it’s really much broader than that. For us, at MetLife, they can be a way to manage and mitigate risk, [but] importantly, ESG has evolved to be a strategic and competitive differentiator, especially when you think about the multitude of stakeholders that care about ESG and sustainability issues. So, for example, employees want to work at places that do good things and make them proud of the company they work for. Investors want to know that the company is managing risks and thinking about the long term. Our large business customers want to know that their supply chain—us as part of their supply chain—that it’s strong, and that their suppliers are managing issues appropriately. And we hear from individual customers who are increasingly seeking out purpose-driven companies to buy from. These are just a few examples, but I think they show that managing ESG and sustainability effectively has a lot more value than just being compliant or just adhering to regulations.
Donna Szatkowski-Zych: How is sustainability thought of when it comes to being integrated into MetLife’s business strategy? How do you ensure that it’s part of how you operate?
Jon Richter: A few years ago, it wasn’t uncommon for sustainability functions to be viewed as a separate function somewhere in corporate that managed community issues, did philanthropy, or somehow handle—and I put that in air quotes—the “nonbusiness issues.” That’s really all changed [over] the last few years. Sustainability, at this point, really must be more closely tied to the business and integrated across how companies operate and all that we do. I would say that our business strategy definitely reflects that here in MetLife. Sustainability is core, it’s a key component of what we call our Next Horizon Strategy, which is our business strategy that we provide updates on to Wall Street and other stakeholders. Sustainability is really fostered and driven into the organizational thinking from the top down. We want it to be a business differentiator for us, so we integrate it into how we support our workforce, especially on diversity, equity, and inclusion issues, career development, [and] wellness at work. We ensure it is part of how we manage our investments. We have investment commitments to support green energy. We have goals to commit US$1 billion in investments with firms that are owned by people of color or women and those with disabilities. It’s also a part of how we think about our product opportunities, and especially on the financial inclusion front, and increasingly on how to support the underserved populations with products and services.
Lastly, I would say it is—of course, it’s a major part of how we engage with communities and how we address climate issues. For example, we have programs in place to plant trees in the name of policyholders that have passed away, or when a customer goes paperless we will plant a tree in their honor. We have a commitment to plant five million trees by 2030. I don’t have the latest tally, but we are making good progress and [are] on track to meet that goal.
Donna Szatkowski-Zych: You’ve mentioned the many insurance stakeholders that are interested in your sustainability efforts. There are regulators and rating agencies, ESG assessment firms, customers [and] investors, [and] your own employees. So how does MetLife balance the needs and interests of these many audiences?
Jon Richter: Ultimately, this is what underpins sustainability and ESG, this focus on understanding and responding appropriately to the expectations of a broad array of stakeholders. It’s about ensuring that you’re addressing the important issues, managing the right risks so that you can drive further differentiation. One of the challenges is that you can’t address every stakeholder expectation, and in some cases, they are even completely at odds with one another. The important thing is to be aware of the broad array of stakeholders, understand their expectations, and then, work across multiple functions internally to decide on what strategy we will use to address them—or if we can’t, to explain why we can’t, and why our business strategy may differ from their expectations. We spend a lot of time talking with internal stakeholders about the ESG issues. We work very closely with our risk function, our investment management group, human resources, our corporate secretary, legal, and many others. You really have to get together, take a holistic approach, weigh the collective pros and cons, and identify what’s right for the business, for the business strategy and then decide. And I think that’s why that a lot of the work of sustainability or ESG functions these days is about raising the issues and orchestrating the appropriate responses.
Donna Szatkowski-Zych: How is MetLife sharing the story and opportunity of sustainability efforts?
Jon Richter: On the external front, we’re doing more than ever to take a stakeholder-driven approach to communicating about what we do, particularly on climate issues. Each group gets the information that they care about in a way that is hopefully most helpful and relevant for them. So, for example, ESG raters and rankers and investors are very interested in how we manage climate issues, how we address DE&I issues, how we approach cybersecurity. They really want to know what our policies are what our strategies are, and the government structures that we have behind all of this. We provide this type of information on our website, but it’s a little bit drier, it’s a little bit of just the facts format, and it’s in a section that we call ESG insights.
That’s very different than how we communicate to and drive awareness to potential recruits, or even current employees. They might be interested more in what we’re doing to address climate change, what we do for communities, how we are a purpose-driven company, and for them the awareness-driving and the information is in more places across the website. It’s more focused on the impact that we make, and it’s really more broadly integrated into to all that we do.
The last area of awareness driving that I’ll mention is how we work and engage with specific functions internally to help everyone understand and connect to sustainability and ESG. I often say that sustainability is a bit like diversity, equity, and inclusion in that it needs to be part of a holistic strategy—where it’s not one function handling it. Everybody needs to play a part. We spend a lot of time engaging various groups internally to understand what their functions can do to incorporate sustainability and how to connect to it.
Donna Szatkowski-Zych: How does MetLife support the development and growth of low-carbon technologies and sustainable energy sources?
Jon Richter: We do a lot to help the transition to a low-carbon economy, literally investing our people and billions of dollars toward solutions.
We just announced a new partnership with the University of California to support the Cleantech to Market accelerator programs, a great program with UC Berkeley to help entrepreneurs commercialize potential climate-tech innovations, and through it MetLife employees provide mentorship opportunities. We serve as coaches, and we are planning to award prizes which are going to further fund the top ideas and the top teams.
Another example that I would mention is from our investments portfolio, including the more than US$34 billion that we have invested in green and renewable energy projects—things like solar arrays and wind farms. In 2020, we issued our first green bond, which was a US$750 million bond secured by a green-funding agreement.
Donna Szatkowski-Zych: Is there anything else we missed about MetLife’s ESG approach that you’d like to spotlight?
Jon Richter: I still think there’s a lot of confusion about ESG. Some only think about climate, some only think about investments. Some only think it’s about taking positions on societal issues, and some just think of it from a reporting perspective. On top of it, ESG and climate issues are getting politicized. It’s important to remember the core of what it is, that sustainability is ultimately about taking a multistakeholder approach, and a holistic, long-term view, and identifying and planning for and addressing the critical challenges that we face.
Donna Szatkowski-Zych: Jon, thank you. I’m so glad you’re helping us to shine a light on this important topic and consider how it can be a real opportunity for insurers of the future. It’s really great to hear what you’re helping make happen at MetLife. Thanks again for sharing your time and expertise.
Jon Richter: It’s truly been my pleasure. Thank you so much for having me. It’s been fun.
Donna Szatkowski-Zych: Great, and if you haven’t checked out this year's 2023 insurance industry outlook, please do so. I think you’ll find it to be a wealth of ideas and insights that will help you on the path to proactive, innovative, and bolder long-term reinvention.
Deloitte’s insurance group brings together specialists from actuarial, risk, operations, technology, tax and audit. These skill sets, combined with deep industry knowledge, allow us to provide a breadth of services to life, property and casualty, reinsurers and insurance broker clients.